Most profitable short term rental investment locations

[Batool Haider]

I am currently in an exploratory mode and trying to nail some of the best locations to purchase STR properties in. AirDNA is difficult to use for that purpose because you have limited free market searches and purchasing subscription per market is costly, especially when you don't know where to buy.

Do you guys have some recommendations for areas I should certainly look into? I looked at Arvada (CO) where +$700K property can yield $120k-$150K revenue. I then found a property in Tobyhanna (PA) where a $280K property can generate the same revenue and hence seems a much better investment in terms of cash-on-cash ROI. Joshua Tree and NC shoreline show great revenue potential too, but like Arvada (CO), the properties there are on the expensive end. Any more places you'd like to add to this list?

[Chris Levarek]

@Batool Haider I've never heard of any of those, so I can't speak to them exactly. Why not just search top vacation destinations in the U.S.  Then apply AIRDNA to a few of those? Here's the thing, sure a niche market might get some attraction for some vacation destination and be less competitive on pricing, but are you willing to bet the farm on your first one? 

Occupancy is a major factor to revenue. Being able to fill a property in a small market for vacation gets tough when people are tight on capital or there is a change in the market, ie.  during inflation for example. 

Yet, if you are seeing 120k gross from a 280k property, I'd verify those numbers that's more than 400 a night at 300 days a year!, in a 2-3br?. Not sure many would pay that when a hotel costs 80-150 in the area and sleeps the same. IF that's accurate, go for it.

There is a lot that goes into it as well, what are the taxes, seasons, management overhead, etc. It comes back to what kind of property you want to manage and what kind of tenants you cater to, which will help determine market choice.

We pick large luxury short term rentals in highly chosen vacation destination markets because that is our audience and we are better than the competition. I also like the Exit B plan of being able to sell in markets that are doing well from a population growth and appreciation perspective.